Essay: Local Economic Development In The Changing World - Frosty Boy Australia Case Study.

Discuss About The Local Economic Development In The Changing World.

Frosty Boy Australia was established in the year 1970 and it produces a large variety of frozen dessert base along with beverage product of high quality (Frostyboy.com.au., 2018).  Frosty Boy has been able to create long-term relationship with client with the help of its innovative research facilities. The target market of Frosty Boy includes the retail business like café, quick service restaurants and convenience stores. Frosty Boy also serves to the service stations and there are many products that are distributed to the international clients. The products of Frosty Boy are vanilla soft serve along with frozen yoghurt base. They are also instrumental in producing beverage powder that includes Velvet Dairy frappe, white chocolate and yoghurt smoothie base. The products of Frosty Boy are of low cost but they are high quality products that has made it popular in the market. The promotion of the products of Frosty Boy Australia are carried out with the help of trade event along with distribution network. The company is also promoted by taking recourse to word-of-mouth with the help of client network (Labonté et al., 2017).The promotion of the products of Frosty Boy Australia is carried out with the help of internal communications that helps in engaging the stakeholders with the help of e-mail newsletter. Frosty Boy possesses distribution network that spreads throughout Australia and they have highly trained distributors that helps in providing local support to the stores in Australia. The Research & Development facilities of Frosty Boy Australia provides it with competitive advantage over other frozen dessert and beverage companies in Australia.

The strength of Frosty Boy Australia is provided by the fact that they have highly skilled food technologist and their research and development facility has provided them a distinct position in Australia. They are instrumental in the launching of innovative products that are of high quality. The weakness of Frosty Boy Australia is due to the fact that rainy weather or the occurrence of cold winter can have a negative impact on the sale of the products of Frosty Boy Australia. They depend on specific vendor for supplying the ingredients and in the event of the vendor raising the price the business of Frosty Boy Australia can suffer. The opportunities of Frosty Boy are created due to the fact that they have made use of various restructuring process that has helped them in maintaining the position of the leader within the international frozen dessert market (Goworek, McGoldrick & McGoldrick, 2015). It is being estimated that the frozen dessert market will grow in the period of 2018-2023 that can help the company in establishing itself successfully in the global market. The demand for low calorie dessert will increase in the coming years and Frosty Boy Australia takes care of the fact that its products cater to the needs of modern day customer. The innovative flavour of the frozen desserts and beverage has opened opportunities for the company that can enable it to spread its operations in the international sphere (Armstrong et al., 2015). The threats for the company arise due to the fact that there other companies in the international sphere dealing with frozen dessert products that are popular that can prove to be a threat for the international expansion of Frosty Boy Australia.

Market Analysis

The language of Australia is English whereas the language spoken in South Africa is Africaans and of Turkey is Turkish. Christianity is the dominant religion in both Australia and South Africa. Islam is the primary religion of the Turkish people. The social norms in Australia place a great amount of emphasis on the aspect of modesty, sincerity and authenticity (Allen, 2015).) The South Africans have a warm and accommodating nature and the people of Turkey lay stress on the aspect of courtesy and they spend a large amount of time in establishing a personal relationship.

Figure: Cultural Distance

Source: Created by the Author

Australia has a high ranking for its political stability and this makes it easier for conducting business in the country. South Africa and Turkey are emerging economy that faces a lot of political turmoil and internal tension that can hamper the market entry of a business into that country. The Australian Intellectual Property Law encourages innovation and protect the business so that they can have competitive advantage. The legal system of Australia is well-developed that helps in protecting the intellectual property of the business (Chetty, Ojala & Leppäaho, 2015).  South Africa possesses a ‘hybrid’ legal system and the law system has been inherited from the Dutch. The foreign investors within Turkey do not have to get the consent of the government authority in the event of incorporation of a company within Turkey that proves to be helpful for the market entry of a foreign country. Australia has free trade agreements that helps in supporting of global trade liberalisation. The trade relations of South Africa are governed with the help of Trade, Development and Co-operation Agreement (Liu,  2017). Turkey has signed an agreement with that of the European Free Trade Association that helps in enlarging the free trade agreement of the country.

Figure: Administrative Distance

Source: Created by the Author

Australia can be said to be an island continent and almost all the states in Australia are surrounded by the ocean waters. To the north of Turkey is located the Black Sea and it has Mediterranean Sea in the south. The oceans that lie around South Africa are the Atlantic and the Indian Ocean. There are a large number of highways in Australia that facilitates trade and there are a large number of national route within South Africa and Turkey that helps in connecting the main cities (Mathews et al., 2016). The weather in Australia is pleasant and there is not great amount of contrast between summer and winter. The climate of South Africa is a bit extreme and they days are warm whereas the nights are cold (Fine, 2018).The weather condition of Turkey is moderate and the cold is not unbearable.

Administrative

Figure: Geographical Distance

Source: Created by the Author

It has been found with the help of data that the median weekly household income amounts to $1438 that illustrates that the Australians have high income. The net adjusted disposable income of South Africa is USD 10872 that is much lower as compared to the OECD average. The net adjusted disposable income of Turkey is lower when compared to the OECD average (Yildiz, Ide & Malik, 2016). Australia provides diverse range pertaining to the study options and the Australians are highly educated (Gerschewski & Xiao, 2015).The education system that exists in South Africa is the worst within the world and the regional instability that prevails hinders the system of education within Turkey (Uddin, 2018). The cost of labour in low in Australia and the labour costs in South Africa and Turkey have risen in the recent times.

Figure: Economic Distance

Source: Created by the Author

All the Australian business plays a part in the arena of environment management and the federal and the local governments present in Australia helps in administering the environmental protection laws within Australia. Department of Environment helps in administering specific Acts that helps in covering activities related to sea, importing and the heritage issues. International Compliance Landscape is changing in South Africa that has been catalysed by robust laws. Anti-corruption legislative framework has evolved in South Africa and the prosecution against the corporate entities has risen in the recent times in South Africa. The Turkish culture is associated with the aspect of harmony and the business present in Turkey are environmentally aware (Hollender, Zapkau & Schwens, 2017). The Turkish business culture maintains a pluralistic approach in relation to nature. The financial reports have brought out the fact that progress in relation to corporate social responsibility in Australia is slow and has been insufficient in the last decade. The corporations in South Africa have realised that they cannot stay isolated to the community and good governance is crucial for the success of their business (Rogerson, 2018).They lay emphasis on the aspect of serving the stakeholder. Stakeholder engagement is a concern of the business present in Turkey and the business in Turkey maintain partnership with the NGOs that helps in the growth of their business (Jack, As-Saber & Edwards, 2015).

The country that is appropriate for the market entry of Frosty Boy Australia is Turkey owing to the courteous culture present within Turkey. It can prove to be favourable for the market entry of Frosty Boy Australia. The government does not intervene in relation to business alliances and partnerships and this can greatly help Frosty Boy in expanding its business operations in the region of Turkey (Chetty, Ojala & Leppäaho, 2015).The businesses present in Turkey are open to the signing of agreements and this can help Frosty Boy Australia in expanding within the Turkish market. Turkey enjoys a moderate climate that is not extreme and this can greatly be of advantage for Frosty Boy Australia. There are national routes in Turkey that helps in connecting the main cities and this can help Frosty Boy Australia in propagating its business within Turkey and maintain its hold in the market (Gerschewski & Xiao, 2015). The system of education in Turkey is better as compared to South Africa that can facilitate the entry of Frosty Boy Australia.

References:

Allen, D. (2015). The sharing economy. Institute of Public Affairs Review: A Quarterly Review of Politics and Public Affairs, The, 67(3), 24.

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction.

Chetty, S., Ojala, A., & Leppäaho, T. (2015). Effectuation and foreign market entry of entrepreneurial firms. European Journal of Marketing, 49(9/10), 1436-1459.

Fine, B. (2018). The political economy of South Africa: From minerals-energy complex to industrialisation. Routledge.

Frostyboy.com.au. (2018). Frosty Boy – A leading manufacturer of frozen dessert bases. Retrieved from https://www.frostyboy.com.au/

Gerschewski, S., & Xiao, S. S. (2015). Beyond financial indicators: An assessment of the measurement of performance for international new ventures. International Business Review, 24(4), 615-629.

Goworek, H., McGoldrick, P. J., & McGoldrick, P. J. (2015). Retail marketing management: Principles and practice. Harlow, UK: Pearson.

Hollender, L., Zapkau, F. B., & Schwens, C. (2017). SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation. International Business Review, 26(2), 250-263.

Jack, R., As-Saber, S., & Edwards, R. (2015). Service embeddedness and its role in a firm’s internationalisation process: an Australian perspective. International Journal of Operations & Production Management, 35(3), 346-369.

Labonté, M. È., Poon, T., Mulligan, C., Bernstein, J. T., Franco-Arellano, B., & L'Abbé, M. R. (2017). Comparison of global nutrient profiling systems for restricting the commercial marketing of foods and beverages of low nutritional quality to children in Canada. The American journal of clinical nutrition, 106(6), 1471-1481.

Liu, Y. (2017). Born global firms’ growth and collaborative entry mode: The role of transnational entrepreneurs. International Marketing Review, 34(1), 46-67.

Mathews, S., Bianchi, C., Perks, K. J., Healy, M., & Wickramasekera, R. (2016). Internet marketing capabilities and international market growth. International Business Review, 25(4), 820-830.

Rogerson, C. (2018). Local Economic Development in the Changing World: The Experience of Southern Africa. Routledge.

Uddin, A. H. M. (2018). Economic and Social Make-Over in Turkey: By Erdogan. INTERNATIONAL JOURNAL OF ECONOMICS MANAGEMENT AND ACCOUNTING, 26(1), 135-155.

Yildiz, H., Ide, G., & Malik, S. (2016). The Relationship between Exchange Rate Volatility and Economic Growth: An Example of Turkey.